Three friends decide that they each want to be able to buy a new boat in five years.

Vanore puts $1,000 in a savings account with a simple interest rate of 4.5%.

Keir invests $1,200 in a standard savers account with a simple interest rate of 4%.

Omar invests $950 in a junior achievers account with a 6% annual compound interest rate.

Who will have the most money to spend on a new boat at the end of the five years? Use the formula I = P r t for simple interest and A = P (1 + r) Superscript t for compound interest. Round to the nearest dollar.
Keir will have $1,440, the most money for the boat.
Vanore will have the most money, $1,271, for the boat.
Omar will have the most money, $1,271, for the boat.
Vanore will have $1,440, the most money for the boat

The simple interest is the finance computation method that determines the value of interest to be earned on the investment or deposit amount.

Computations:

1. Computation of money spend by Vanore:

Amount=P+(P*r*t)

Amount=$1,000+($1,000*0.045*5)

Amount=$1,000+$225

Amount=$1,225

2. Computation of money spend by Keir:

Amount=P+(P*r*t)

Amount=$1,200+($1,200*0.04*5)

Amount=$1,200+$240

Amount=$1,440

3. Computation of money spend by Oman:

Amount=P(1+r)^t

Amount=$950(1+.06)^5

Amount=$1,271

Therefore, Keir will spend the highest amount of $1,440 amongst all three friends. Hence, option A. is correct.

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